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Think the TPP is a big deal? Think again

The trade deal’s significance is being politically oversold as a historic achievement.

Commentators on the TPP have referred enthusiastically to the easier entry into Japan for Canadian beef. But you've got to like it before you eat it, writes Tim Armstrong.
(Ryan Remiorz / THE CANADIAN PRESS)

By Tim Armstrong

Wed., Oct. 7, 2015

The Trans-Pacific Partnership is being heralded by the Conservatives, in a drumbeat message echoed by the media, as a mammoth, record-breaking deal of enormous significance — uniting the vast Western Pacific area and its key trading and investment partners with the Americas, together representing 40 per cent of the world's GDP.

Really?

Let's look at what we know about the participants, leaving aside the substantive details which in due course will be disclosed and assessed.

From the Western Pacific side, there are five Asian partners — Brunei, Singapore, Malaysia, Vietnam and Japan, together with Australia and New Zealand, which have their own continent. In terms of size, Japan dwarfs the others, with 4.5 per cent of world GDP. The other Asian participants? Less than 1 per cent of world GDP and about 4.8 per cent of Asian GDP.

The TPP is said by supporters to represent U.S. President Barack Obama's progressive “pivot to Asia.” That’s overstating it. The deal may be a pivot to Japan, but most of the other key Association of South East Asian Nations (ASEAN) countries are missing.

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In fact those countries are pursuing their own, presumably preferred initiatives, including the Regional Comprehensive Economic Partnership (RCEP) with China (conspicuously absent from the TPP), India and Indonesia, the three largest Asian economies. All the other ASEAN members, plus Australia and New Zealand, are participating in the RCEP negotiations, which were launched in 2012.

Apart from Japan, the other four Asian participants in the TPP represent relatively modest trade and investment opportunities. Brunei, oddly one of the original proponents of the TPP, is a tiny area on the north shore of the island of Borneo, the size of the state of Delaware with a population of 400,000, smaller than Hamilton. Both Malaysia and Singapore are small but prosperous and growing economies, as is Vietnam. But together, the four represent just a tiny footprint in Asia.

Australia and New Zealand have their own non-Asian continental identity. They have linked themselves to the ASEAN-led RCEP negotiations — which include TPP signatories Malaysia, Singapore, Vietnam and Brunei, and yes, Japan. How these two initiatives may coexist — if they are both ultimately pursued — remains to be seen.

The most significant TPP question relates to Japan's inclusion. The answer will depend in part on the detailed provisions, most of which are not yet known. But from personal experience as Agent General in Tokyo, I quickly learned that trade and investment penetration into the Japanese market will not be easily achieved by agreements of this sort, whatever their content. Japanese consumers, for decades, have preferred their own homegrown products and services — automobiles, electronics, financial services and many other fields — and will continue to do so. For instance, commentators have referred enthusiastically to the easier entry into Japan for Canadian beef. But you've got to like it before you eat it.

Many high-profile figures in the U.S. from across the political spectrum have said that the TPP deal is a bad one — that’s the position of Bernie Sanders and Robert Reich, as well as Ron Paul and Donald Trump. Others say it's premature to make a judgment before analyzing the substantive content. But regardless of the substance, the deal’s significance as a so-called “pivot to Asia” is vastly over-dramatized and is now being politically oversold as a historic achievement — something we Canadians should bear in mind between now and Oct. 19.

Tim Armstrong, a lawyer and former Ontario Deputy Minister of Industry and Trade, was Agent General for the Asia-Pacific Region.

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